Milwaukee Tool Paints Downtown Red

Milwaukee Tool’s downtown Milwaukee office building. Photo by Jeramey Jannene.

It’s hard to miss Milwaukee Tool‘s new downtown office building, once obfuscated in planning documents as “Red Beacon.”

The five-story office building now features two massive Milwaukee Tool company logos backed by even larger red backdrops.

It’s also getting increasingly easy Downtown to spot a Milwaukee Tool employee, the company’s logo is hard to miss on their apparel.

The Milwaukee office represents a major shift for the company, which decamped for Brookfield in 1965 and moved most of its manufacturing to Mississippi in 1973. Now it’s more than a decade into an aggressive growth period that has seen it add thousands of employees in Wisconsin.

In 2021 during a public subsidy debate for the new downtown office, company chief financial officer Ty Staviski attributed the Milwaukee Tool’s growth to the 2011 addition of a hand tools product line.

The company had 227 employees in southeast Wisconsin in 2008, but now has more than 3,000. It’s both expanding its suburban Brookfield headquarters and relocating select product lines to the downtown office.

Earlier this spring, the company reported 900 employees working from the 370,000-square-foot downtown building. It needs to have at least 1,210 full-time employees in the building, 501 W. Michigan St., and invest $30 million in its renovation by 2026 to maintain the $12.1 million it was initially granted from the City of Milwaukee as part of a tax incremental financing district development agreement.

A series of clawback provisions and other incentives could bring the subsidy to $20 million if the company grows employment to 2,000 (an additional 790 employees) and expends an additional $15 million expanding the building within 20 years.

An employee is judged as someone that earns at least 150% of the federal minimum wage, while working 35 hours per week and 1,820 hours per year. The company can combine the salaries of part-time employees to be counted as full-time equivalent employees. Employees that work remotely can be counted, if they live in the city. Partially-remote workers need to spend at least 60% of their time working at the new facility or in their city residence.

The city is to recover costs associated with the subsidy through increased property tax revenue from the development. The property’s value has already jumped from $4 million in 2020, when it was vacant, to $52.4 million today.

The building, originally constructed in 1978 for Blue Cross Blue Shield, has seen its facade substantially altered as every window has been replaced and the 800-stall parking garage rehabilitated. An affiliate of Milwaukee Tool purchased the property for $7.9 million in May 2021 from developer F Street Group, which had bought the mostly-vacant building in late 2019 for $4 million and released a conceptual redevelopment plan.

Stephen Perry Smith Architects led the renovation project’s design, which had an emphasis on speed according to Milwaukee Tool. Mortenson Construction led the general contracting.

The company reported being short 800 “seats” for employees during the 2021 subsidy approval process. It opened the new downtown office in phases, delaying the opening of the fifth floor as part of an unexpected need to replace the roof at a cost of $4 million.

A large atrium that also includes a stadium-seating gathering space now unifies all of the floors. But it’s not the only source of natural light, the company installed several new large window bays in the building expanding much smaller existing bays.

Milwaukee Tool acquired the property through an affiliate known as Schwer, Pflicht & Werzkeug Properties LLC, the same entity used for at least one other Milwaukee area purchase. The German words, from the native language of Techtronics chairman Horst Pudwill, translate to heavy, duty & tool according to Google Translate.

Milwaukee Tool was founded in Milwaukee in 1924, but since moving to Brookfield it has iterated through several owners. Since 2005, Milwaukee Tool has operated as a division of Hong Kong-based Techtronics Industries. The division reports recording 22% annual growth between 2009 and 2022. Its annual sales now eclipse $8 billion.

Because the company is receiving at least $1 million in city support, at least 40% of construction work hours on the project were required to be completed by unemployed or underemployed city residents (the Residents Preference Program) and at least 25% of the contracts by value needed to go to city-certified, disadvantaged Small Business Enterprises.

According to a Wisconsin Economic Development Corporation release, since 2016 the company has pledged to create up to 1,812 new jobs and invest $174.5 million in capital projects in exchange for up to $46 million in tax incentives. That includes new or expanded plants in Sun Prairie and West Bend, but does not include the Milwaukee project.

Photos

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Pre-Construction Photos

Rendering